ANZ New Zealand says the pace of profit growth will ease as bad debts return to normal levels.
ANZ made $1.1 billion in the year to September, an increase of 25% compared with the previous year, mainly due to a fall in the amount of money set aside to cover potentially bad loans, which fell by more than half to $187 million.
Income growth rose a more modest 7% to $3.2 billion, led by a switch to higher margin floating mortgage rates by households, while costs fell.
But ANZ New Zealand's chief executive David Hisco says farmers repaying debt and fewer mortgage loans over 80% slowed growth in the second half of the year.
He says ANZ New Zealand has the largest share of the rural market in New Zealand with a 36% share.
Mr Hisco says a lot of farmers have had a tough few years and with the recent increases in milk prices farmers have taken the opportunity to pay their debt, which is affecting the balance sheet.
He says in 2008 the vast majority of mortgages were over 90% in New Zealand and the bank took some heavy losses on those after the global financial crisis.
Lending volumes edged down 2% to $89 million, while deposits rose 4% to $50 billion, though margins fell as it battled its rivals to attract local savers.
Like the other major banks, Mr Hisco says Europe's debt crisis is not hindering ANZ's ability to raise money overseas, but it does cost more, and if the crisis continues, borrowers should brace for higher rates.
Looking ahead, Mr Hisco says income is expected to grow modestly as the economy continues to recovery gradually, and cost control will be critical.
He says profit growth will be slower too.
Overall, the ANZ Group's profit rose by 19% to $A5.3 billion because of a drop in bad debts.
ANZ is the largest bank in New Zealand. It is Australian-owned.